The UK rental market is experiencing a shift as more homes are being offered for rent rather than for sale. This trend is driven by homeowners who are unable to sell their properties at their desired prices. Over the past two years, rental prices have increased by almost 10%, creating a situation where the demand from tenants far outweighs the available supply of homes.

According to various letting agents, there has been a gradual increase in the number of rental homes across the UK in the past year. Connells, an estate agency group with over 1,200 branches, has reported an 8% increase in rental homes since March. Similarly, Hamptons, another estate agent, has observed a 17% rise in rental properties compared to the previous year. However, it is important to note that despite this increase, the number of rental homes is still significantly lower than it was in 2019, with a drop of 43% across all regions and 65% in Scotland.

What’s the current trend?
Rental homes availability has been slowly rising this year. Connells, a big estate agency group, has seen an 8% rise in rental homes since March. Despite this increase, the demand still surpasses the supply, leading to a continued rise in some areas. Another estate agent, Hamptons, noted that there’s now 17% more rental properties compared to last year. But, interestingly, compared to 2019, the rental market still has 43% fewer homes available.

So, will the rents stop increasing?
David Fell from Hamptons suggests that until mortgage rates fall, rents will likely keep going up. Higher mortgage rates mean landlords have higher costs, which they pass onto renters – “It’s hard to see rises in rents begin to stall or even reverse until lower mortgage rates reduce the squeeze on investors and potentially tempt in some new landlords. Until then it will be tough and expensive to find somewhere to rent.”

Any good news for renters?
In London, things might be looking up for renters. There’s been a 39% surge in available rental properties compared to last year. Also, the number of people looking to rent has reduced by 5%. This has given potential tenants a better bargaining position. In fact, 88% more landlords than last year have been open to lowering their asking rents to get a tenant.

Any other insights from the London market?
Chestertons, a London-based letting agent, states that due to difficulties in the sales market, many are opting to rent out their properties, temporarily halting the sharp rental price rises seen since 2021. Knight Frank, another agent, confirms that the London rental market is seeing more properties, especially in prime areas. However, even with increasing supplies, the rental growth remains historically high.

What’s the bottom line?
More homes are becoming available for rent, especially in London. This might give some relief to tenants and might slow down the sharp increases in rent. However, as long as mortgage rates remain high, landlords’ costs will be high, which will likely keep rents elevated.